Personal Fitness Professional - January 2008 - (Page 17) Complimentary Services Many private training studios have found it profitable to add equipment that compliments a fitness club, not necessarily fitness equipment but possibly an aqua massage unit, body wraps, tanning, etc. Most members don’t have a lot of time, and if they can get two services under one roof, they most likely will take advantage of it. Like most business owners, you are probably struggling with finding ways to pay for this new equipment. There are a myriad of options to consider, not to mention the tax benefits or consequences that each of those choices carry. Advantages of Debt Most people prefer not to have debt if at all possible, but debt managed properly can be an asset to you. It not only helps to build your business credit rating but can give you some very good tax benefits that you would not have had if you paid cash. There’s a lot to be said for using someone else’s money, especially when you will be generating additional profits each month by having this new equipment. This is where equipment leasing becomes a major asset to you. One of my favorite analogies is that you should look at your equipment the same way you would an employee. Both are there to help you generate more business and boost profits. However, you would never consider paying an employee three or four years worth of salary in advance, so why would you pay for equipment ahead of time? By leasing your equipment, it should easily generate enough profits to cover the lease payment as well as additional profits for you. Leasing Helps Your Cash Flow Equipment leasing allows you to get the equipment you need now while paying for it over its anticipated lifetime. By leasing your equipment versus paying cash, you can avoid spending extra money today that will adversely affect your cash flow. There are many benefits to leasing your equipment. The primary advantage is that it allows you to acquire assets now with minimal up-front expenditures. Most equipment leases only require a small deposit. Another financial benefit of equipment leasing is that your lease payment is generally considered to be a rental expense. Thanks to this tax advantage, it helps reduce the net cost of your lease. In addition, a commercial equipment lease will not affect your personal credit like a bank loan or credit card would. This helps immensely, if you decide to, say, buy or refinance a home. Leases Are Easy to Obtain Leases are also generally easier to obtain than bank lines and sometimes can be accomplished with an application only. If you have been in business less than two years, you can expect to lease up to $60,000 with just a credit application, and, over two years in business this amount can go as high as $250,000 with an application only. Leases Are Flexible Leases also offer more flexible terms than traditional banks, such as a 90day deferred program. This program allows you to take possession of the equipment now and make no monthly payments for the first 90 days. This is a great tool when adding a new service, as it allows you the time to sell the service to your client and collect the income before having to make any payments. Banks, for the most part, are not in the market to finance equipment. They understand real estate and auto loans, but when it comes to equipment, they most likely will either ask to put a lien on your real estate or refer you to an equipment leasing company. With an ➤ JAN-FEB2008 · WWW.FIT-PRO.COM 17 http://WWW.FIT-PRO.COM
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